Local governments’ non-cooperation hampers loan recovery: BFIs

Kathmandu, July 10

Banks, development banks, finance companies, and microfinance institutions have expressed serious concerns over the lack of cooperation from local governments during the loan recovery process.

According to Banks and Financial Institutions (BFIs), many local authorities either delay or outright refuse to provide essential documents such as right-of-way and access certifications, making it difficult for financial institutions to proceed with loan recovery within the legal framework.

Without the document for right-of-way and access certification, the banks can't transfer the ownership of the property to the new buyers.

In a joint statement issued by the Nepal Bankers’ Association, Development Bankers’ Association Nepal, Nepal Financial Institutions Association, and Nepal Microfinance Bankers’ Association, the organisations warned that such obstructions are negatively impacting the loan recovery process. This, they say, could disturb the overall financial cycle and ultimately threaten the country’s economic stability.

The institutions stressed that they have been complying fully with the policies, procedures, and legal provisions issued by Nepal Rastra Bank (NRB) regarding loan disbursement and recovery. "However, when loans are not repaid, and the financial institutions initiate auction proceedings, offices such as land revenue departments require various supporting documents—including property valuations and access approvals—that local governments are reluctant to issue," read the statement.

A case of physical assault on bankers by the creditor and ward representatives has already been registered with the police. According to bankers, all levels of BFIs are facing trouble in loan recovery due to the non-cooperation from the local offices and office bearers.

While the BFIs were facing challenges to recover loans during the anti-BFIs campaign launched by an interest group a couple of years ago, the non-cooperation has emerged as the new problem.

The BFIs further reported a disturbing rise in cases where financial sector employees face threats, psychological pressure, and even physical attacks during the recovery process.

"Such incidents undermine the integrity of the banking sector and significantly lower staff morale, while also raising serious concerns about the rule of law," they said.

According to them, there is no doubt that effective coordination between local governments and financial institutions is vital for the country’s economic development under federalism.

The associations urged all concerned authorities to take the matter seriously and facilitate local-level cooperation, ensure peace and security, and resolve these pressing challenges in accordance with the spirit of federalism.

Published in The Rising Nepal daily on 11 July 2025.   

FNCCI suggests project-based loan facility

Kathmandu, July 4

Federation of Nepalese Chambers of Commerce and Industry (FNCCI) has suggested the Nepal Rastra Bank (NRB) to announce project-based loan facility to facilitate the expansion of small and medium enterprises and startups through its Monetary Policy of the coming Fiscal Year 2021/22.

A delegation of the business body led by its President Shekhar Golchha met Governor of the NRB Maha Prasad Adhikari on Sunday and recommended continuing the policy taken in the current FY 2020/21 for the business revival and accord priority to the SMEs.

“SME targeted refinancing has given a huge relief to the COVID-19 affected businesses so the policy should be continued in the next fiscal as well,” recommended the FNCCI and said that priority should also be given to the development and expansion of digital banking.

Golchha said that the FNCCI was studying about the feasibility of the project-based loan and would soon submit the report to the NRB.

SMEs have about 22 per cent share in the national economy.

Saying that the economy is undergoing through tight liquidity situation, the FNCCI recommended that the monetary policy should be focused on maintaining liquidity in the market.

“Using the available instruments, the central bank should try to contain the interest to the single digit. The monetary policy should also analyse the pressure on foreign exchange reserve and balance of payment when economic activities take pace,” said FNCCI.

It has also hoped that rapid vaccination would help bring the economy back on track and it would jump to a double-digit growth after a discouraging situation for a couple of years.

Governor Adhikari said that the central bank would accommodate the suggestions from the private sector in order to help the latter in business revival.

Published in The Rising Nepal daily on 5 July 2021. 

NRB urges banks not to blacklist entrepreneurs

Kathmandu, Nov. 1

Governor of the Nepal Rastra Bank Maha Prasad Adhikari has urged the banks and financial institutions (BFIs) to not blacklist the debtors and auction their collateral at a time when their enterprises are slowed or weakened by the COVID-19 pandemic.

"The central bank has directed the BFIs no to blacklist the debtors and sell their collaterals. Please implement that directive," he said in an interaction on the implementation of the Monetary Policy 2020/21 and current economic situation, organised by the NRB's Research Department and BFIs Regulation Department on Sunday.

The interaction was organised online and participated in by entrepreneurs, traders and other representatives from 66 districts across the country.

The governor also said that the BFIs should behave as per the status of the clients while accepting the payment of the capital and interest of the loan. Ask for the repayment from the businesses and entrepreneurs that are earning money and don't ask those suffering in the pandemic and losing their money, he said.

According to him, the central bank was ready to address the problems faced by the BFIs due to the coronavirus pandemic.

The NRB aims at expanding the refinancing facility to all 753 local bodies and has urged to register complaint at the Grievance Handling Unit if any BFI denies extending the facility as per the central bank's policy.

Through the monetary policy, the central bank has announced Rs. 200 billion refinancing provision and facility for up to 20 per cent additional loan to the entrepreneurs.

"Please reach the nearest BFI and obtain the policy concession announced by the NRB; if you don't get the facility, it would be useless. We had designed the facility to rehabilitate the businesses affected by the pandemic," said Adhikari.

Secretary at the Ministry of Finance and member of the NRB Board of Directors Shishir Kumar Dhungana emphasised on the cooperation among the government, NRB, BFIs and private sector for business rehabilitation. He also said that the government had announced various relief measures and facilities for the entrepreneurs and enterprises in the budget of the current fiscal year 2020/21.

Senior Vice President of the Federation of Nepalese Chambers of Commerce and Industries Shekhar Golchha said that the NRB's policy had saved the economy from serious accident.

Entrepreneurs said that the BFIs had exhibited indifference about implementing the refinancing facility. It is difficult to obtain refinancing, concessional loan, discount on interest and reduction in interest rate, they said.

According to them, the BFIs had become more profit oriented at the cost of service. However, the BFIs expressed their commitment to stick to the NRB policies and implement them.

President of the Nepal Bankers Association Bhuwan Kumar Dahal said that the banks were ready to move ahead hand in hand with the entrepreneurs.

Published in The Rising Nepal daily on 2 November 2020. 

Be liberal in AML to bring in hidden financial resources: CBFIN

Kathmandu, Apr. 21

Confederation of Banks and Financial Institutions Nepal (CBFIN) has suggested the government not to raise the issue of anti-money laundering (AML) and ask any source of income requirement and tax clearance if any woman deposits up to Rs. 1.5 million in the banks and financial institutions (BFIs).

"Such sort of fear has already discouraged them to deposit in financial institutions. It helps to mobilise hidden financial resources scattered across the country," said the organisation in a statement on Tuesday.

It also suggested allowing a non-resident Nepali or foreigner or company to invest half a million dollars foreign direct investment through merchant banks or capital companies in the stock market.

"Their lock-in period for 2-3 years can be discussed," reads the statement issued by Bhoj Bahadur Shah, Spokesperson of the organisation.

The CBFIN demanded to avoid the approval from the Nepal Rastra Bank or Department of Industry for a FDI of up to US $5 million. If NRNs could bring $ 1 million in Nepal for investment, government should not ask for the source of the fund, it said.  

It also suggested not to ask for a source if any Nepali citizen invests in agriculture and other productive sectors.  

Likewise, it demanded the BFIs to make available of ‘interest-subsidy’ of10 per cent to all the regular borrowers for all sorts of loans who pay installments till Baishak, 2077, mid-May, 2020.

As per the CBFIN, 1 per cent interest rate will be reduced from Baishak by commercial banks for up-to Rs. 10 million loans. Similarly, 1 per cent interest rate will be reduced by development banks for upto Rs. 4 million loans, and 1 per cent by the finance companies for upto Rs. 2 million.

It has also decided to form a task force to study the impact of COVID-19 and recommend way forward by developing short term, medium term and long term strategy to revive the economy and submit to the government and the central bank.

The study team will identify existing bottlenecks on various sectors of economy, future challenges in the financial sector and workable recommendations within 2 weeks.

The Chairmen of various financial institutions have suggested that all private sector organizations and the financial institutions should work jointly with the government and support to revive the various sectors of the economy for survival.

"Now it is time for sacrificing by everyone and work in unison to resolve the crisis brought by Covid-19 pandemic, and protect our stakeholders for the existence," they said.

CBFIN is an association of chairmen and directors of BFIs. Currently, there are 27 commercial banks, 24 development banks and 22 finance companies.

Published in The Rising Nepal daily on 22 March 2020.